How GameFi Is Driving a New Wave of Blockchain Adoption

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The glob­al blockchain tech­nol­o­gy mar­ket reached $5.9 bil­lion in 2021 and is pro­ject­ed to snow­ball at an annu­al growth rate of 85.9% until 2030.

Sev­er­al fac­tors can be attrib­uted to this growth rate, includ­ing the ris­ing inter­est in DeFi (decen­tral­ized finance) and non-fun­gi­ble tokens (NFTs). Despite the pos­i­tive fore­cast, these ver­ti­cals still have much to deliver.

Cre­at­ing real impact in the glob­al blockchain ecosys­tem can be fun – and that’s exact­ly what the play-to-earn (P2E) par­a­digm is bring­ing to gamers around the world.

In fact, 18% of glob­al NFT gamers aged between 18 and 34 have expe­ri­enced P2E gam­ing. Regions in South­east Asia, along­side India and Brazil, have the high­est par­tic­i­pa­tion rates.

The impacts of DeFi and NFTs on P2E

The emerg­ing field pow­ered by DeFi and NFT tech­nolo­gies is enhanc­ing attrac­tive incen­tives for the Game­Fi ecosys­tem. For instance, play­ers can earn token rewards by com­plet­ing mis­sions in a game. In most cas­es, the earned tokens can be trad­ed into local cur­ren­cy or oth­er dig­i­tal assets.

DEXs, the pin­na­cle of DeFi’s core offer­ings, are a pop­u­lar route used for token swaps. NFT mar­ket­places have also surged in pop­u­lar­i­ty as an inte­gral Game­Fi pillar.

How­ev­er, as fun as it might sound, many P2E games pose high entry bar­ri­ers for new­com­ers. For instance, many Game­Fi plat­forms require users to pur­chase NFTs before get­ting started.

These can be char­ac­ters, weapons or a trea­sure pack. In one pop­u­lar game, play­ers had to upfront $1,100 just to begin – a hefty amount that is far above the expect­ed bud­get of most gamers.

Reduc­ing bar­ri­ers to entry with NFT renting

For­tu­nate­ly, inno­va­tions around the fusion of DeFi and NFTs are intro­duc­ing new ideas that can make P2E more acces­si­ble. For exam­ple, lend­ing and bor­row­ing pro­to­cols based on smart con­tracts allow gamers to acquire the NFTs they need with an afford­able budget.

Gamers are able to pay nom­i­nal fees to bor­row in-game assets, with­out putting up risky col­lat­er­al to lenders. Instead of pur­chas­ing cost­ly NFTs upfront, users now have the free­dom to try out games by rent­ing dig­i­tal assets. If the play­er decides to stick around, they can opt to buy the NFT they val­ue and con­tin­ue hav­ing fun.

At the same time, play­ers who lend out their NFTs unlock the oppor­tu­ni­ty to earn pas­sive income with zero default risks. This is made pos­si­ble through the con­cept of expirable NFTs. It elim­i­nates the risk of bor­row­er default since the rent­ed NFT is in fact an expir­ing ver­sion of the actu­al NFT.

After a spec­i­fied peri­od, the rent­ed NFT is auto­mat­i­cal­ly returned to the lender via trust­less smart con­tracts. This allows gamers to exper­i­ment with a new P2E game for, say, two weeks – upon which the bor­rowed NFT is returned seam­less­ly to the lender. This helps to make P2E gam­ing a lot more attrac­tive and per­haps eco­nom­i­cal­ly sustainable.

Dri­ving an inclu­sive P2E ecosys­tem with guilds

Besides the tech-dri­ven approach with NFT rent­ing, the indus­try is explor­ing oth­er mod­els to help onboard new­com­ers into the P2E space. Case in point – com­mu­ni­ty-cen­tric gam­ing guilds are pro­vid­ing resources to play­ers, also known as schol­ars, who split earn­ings with the guilds.

Sim­i­lar to tra­di­tion­al schol­ar­ships, the ini­tial resources and sup­port are pro­vid­ed to the play­er. Guilds often pro­vide the game assets, tools and train­ing required for gamers to start earn­ing. The reward split varies among spe­cif­ic guilds. Typ­i­cal splits can be 70/30 where the gamer keeps the major­i­ty of the earnings.

Schol­ar­ships for new entrants into the P2E land­scape can be a game-chang­er in many ways. For instance, schol­ars from any region or finan­cial back­ground can imme­di­ate­ly start earn­ing to lev­el out the com­pet­i­tive play­ing field. Earned tokens or NFTs can be direct­ly exchanged to oth­er dig­i­tal assets on Web 3.0 mar­ket­places or even to fiat currency.

Guilds also give back by sup­port­ing var­i­ous ini­tia­tives, such as devel­op­er fund pro­grams. These ini­tia­tives empow­er builders to cre­ate more inno­v­a­tive solu­tions, includ­ing games that don’t require upfront spend­ing. Such devel­op­ments have led to sev­er­al Game­Fi vari­a­tions includ­ing play-and-earn and free-to-play models.

Dis­rup­tion through innovation

Such dynam­ics have led to a boom among young to mid­dle-aged gamers. There are cas­es in which a gamer achieved three times as much income com­pared to his nor­mal day job.

The foun­da­tions of DeFi and NFTs have demon­strat­ed nov­el growth poten­tial for the blockchain gam­ing indus­try. New NFT rent­ing capa­bil­i­ties, cou­pled with com­mu­ni­ty guilds, are encour­ag­ing new­com­ers to par­tic­i­pate with less fric­tion. The ball is now on the industry’s court to fur­ther inno­vate and dri­ve mil­lions of new users into the Game­Fi space.


Hikaru Kasai is one of the co-hosts from The Human & Machine.

 

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Fea­tured Image: Pixabay/ArtTower



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